Texas Supreme Court oral arguments (3/24/15)

   Posted by Scott Stolley, Thompson & KnightThe Texas Supreme Court will hear three oral arguments on Tuesday, March 24, 2015 in Austin. The cases involve (1) breach of a gas-purchase agreement, (2) calculation of oil-and-gas royalties, and (3) application of the discovery rule to a suit to reform a deed. Reproduced below is the Court’s advisory about the arguments. Texas Supreme Court advisoryContact: Osler McCarthy, staff attorney for public information512.463.1441 or click for emailFor Tuesday, March 24, 2015THREE CASES SET FOR ARGUMENT TUESDAY 13-0596Kachina Pipeline Co. Inc. v. Michael D. Lillisfrom Concho County and the Austin Court of AppealsFor petitioner: Marnie A. McCormick, AustinFor respondent: Gary Bellair, Lubbock            The principal issues in this dispute over a gas-purchase agreement are (1) whether a pipeline company breached its contract with a gas producer by charging for downstream compression services at a plant that predated the contract and (2) whether the producer breached the contract’s first-refusal option by building his own pipeline to deliver gas to a processing plant (bypassing the pipeline company). Lillis, the producer, sued Kachina Pipeline for contract breach, alleging Kachina improperly charged Lillis for compressing Lillis’s gas before delivering it to the processing plant. The contract allowed Kachina to charge for installing, repairing, maintaining and operating its compression unit, plus additional costs, if Kachina installs compression equipment necessary to deliver Lillis’s gas. Kachina countersued, claiming that Lillis’s agreement to sell gas directly to the processor violated a contract provision that gave Kachina a right to notice of and to meet the terms of the new agreement between Lillis and the processor. The trial court granted summary judgment for Kachina, but the appeals court reversed.BriefsCourt of appeals opinion14-0302Chesapeake Exploration L.L.C. and Chesapeake Operating Inc. v. Martha Hyder, et al.from Tarrant County and the San Antonio Court of AppealsFor petitioners: Matt Stayton, Fort WorthFor respondents: David J. Drez III, Fort Worth            In this case over a “cost-free” overriding royalty on gross minerals production, from wells on Hyder’s property that produced from an adjoining leasehold, a principal issue is whether post-production costs may be deducted from Hyder’s overriding royalties. Hyder sued Chesapeake for underpaying royalties from Chesapeake’s slant-drilling production from wells on Hyder’s land. The central dispute is whether Hyder’s lease with Chesapeake for oil-and-gas production from her minerals estate, allowing for post-production costs, should inform a provision that provides a cost-free 5 percent royalty for directional production from adjacent estates. The trial court ruled that Hyder was entitled to an overriding royalty free of post-production costs. The court of appeals affirmed.BriefsCourt of appeals opinion14-0346Barbara D. Cosgrove v. Michael Cade and Billie Cadefrom Tarrant County and the Fort Worth Court of AppealsFor petitioners: Ralph H. Duggins, Fort WorthFor respondents: Jeremy Gaston, Houston            A principal issue is whether the discovery rule delays limitations on a suit to reform a deed based on mutual mistake. In this case the Cades sued four months after limitations ended, after attempting to get Cosgrove to fix the mistake. In conveying their home and the two acres surrounding it, the Cades specified in the real-estate contract that they, as sellers, would retain the mineral interests. But the deed did not reserve the mineral interests. The Cades argue that the discovery rule should extend limitations on their suit, that is, that they could not have known until they did that the deed was contrary to the real-estate contract. The Cades chose the title company to prepare the deed and closing documents, which includes an agreement that Cosgrove, as buyer for a trust, would adjust or correct any errors or omissions necessary to comply with the sales contract. The trial court granted summary judgment for Cosgrove. The court of appeals reversed, holding that neither the Cades nor Cosgrove were entitled to summary judgment.BriefsCourt of appeals opinionNOTE:This advisory is for planning purposes only. The Court’s staff at0torney for public information prepares these summaries, which reflect his judgment alone on facts and legal issues and in no way represent the Court’s opinion about case merits.